The CSD BR registrar wants to start operating a 'central counterparty' (CCP) within three years and Goldman Sachs sees risks for B3's business (Image: B3/Disclosure)
A B3 (B3SA3) should prepare for a new competitor soon. In addition to the if of Rio de Janeiro, operated by ATG, which is expected to start operations in the second half of 2025, the registrar CSD BR wants to start operating a 'central counterparty' (CCP) within three years.
CSD president Edivar Queiroz stated that the company will be ready to enter the stock exchange business by 2027, in an interview with Estadão.
The request for the operation must be filed with the Central Bank by the end of this year.
The central counterparty is considered the “heart” of a stock exchange, providing liquidity for thousands of transactions to take place at the same time. In general terms, the CCP is responsible for ensuring the closing of multiple trades of an asset.
According to Goldman Sachs, B3's new potential competitors can already be considered a risk for B3SA3 shares, even before the start of operations by ATG and the CSD central counterparty. So far this year, the shares have fallen by more than 20%.
“Equity revenues represent 35% of B3’s total revenues in the last 12 months. We estimate that approximately 80% to 90% is related to compensation, which may be at risk from a potential competitor,” the analysts write.
More specifically in the case of CCP, the bank’s analysts believe that having more than one business can create “market inefficiencies,” such as different settlement and margin requirements — which can limit the scope for competition.
The high capital and collateral requirements to maintain a central counterparty are also risks considered by analysts.
Furthermore, “the risk of competition in FICC (derivatives), which account for 23% of revenues, is even more limited as any new competitor would have to create its own listed derivatives contracts,” they write.
“Indeed, most countries globally operate with only one central counterparty.”
Is it time to invest in B3SA3?
Goldman Sachs has a neutral recommendation for B3SA3 shares.
The target price for the shares is R$13 — which represents a potential appreciation of 16.1% over the closing price last Monday (23).
In the bank's accounts, B3 is trading at a multiple of 12x price to earnings (P/E), 31% below the historical average of 17.6x.
This Tuesday (23), the shares of the owner of the São Paulo stock exchange are trading higher. At around 3:14 pm (Brasília time), B3SA3 recorded gains of 0.71%, at R$11.28.
What is CSD BR?
CSD BR was created in 2017, from a partnership between BTG Pactual, Santander Brasil and the Chicago Stock Exchange (CBOE).
The company has been registering fixed income transactions since 2020, with registered transactions reaching R$2.5 trillion in September, compared to R$500 billion in the same period last year.
*With information from Estadão